The role of a board of directors in responding to an unsolicited takeover bid

The proliferation in the use of the unsolicited takeover bid as a means of acquiring corporate control has had profound implications, especially on large publicly traded companies. Although much has been written about the efficacy of takeover bids advancing shareholders\u27 interests and economic prosperity in North America, surprisingly, opinions on this topic remain divisive. What is even more interesting is the diversity of opinions held with respect to directors\u27 obligations when responding to an unsolicited takeover bid. What is the appropriate role of a board of directors when their company becomes the subject of an unsolicited takeover bid? In the execution of their duties and obligations to manage the business and affairs of a company, we are told that directors are in part, required to acthonestly and in good faith in promoting the best interests ofthe company. Much of the discussion in this paper will be confined to how this phrase, the best interests of the company might be interpreted in the context of an unsolicited takeover bid. What are the constituent elements that make up the company ? Which interests should be construed as being in the company\u27s best interests? To whom are the directors\u27 duties and obligations owed in endeavouring to promote the best interests of the company? In the conclusion of this thesis, a theory has been advanced based on the notion of reasonable shareholders\u27 expectations and legitimate shareholders\u27 interests, as a possible approach to understanding the correct meaning of the phrase, the best interests of the company and from that, the role directors are to play when confronted with an unsolicited takeover bid for their company